So you want to raise the rent, but you’re worried you might lose tenants. This is a tricky thing you might want to do, but you want to keep your best tenants. When you’re ready to raise the rent, it has to be done right or you could scare off your renters.
Whether you’re a first-time landlord or you’ve been at it a while, the right tips can help you. The last thing you want to do is cause your properties to become vacant. Let’s look at a few tips to help you raise rent without losing tenants.
Top 5 Tips for Raising Rent Without Losing Tenants
1. Stick with the Market Values
If the market value for your property is $1,000 per month for rent and you try to charge $1,200, it will likely send even good tenants to a new property. Make sure you do good market research and look at the rental rates in the area near your property.
Trying to charge too much compared to other rentals in the area can cost you good tenants. If you raise the rent, most tenants are going to shop around. When they find out your rental price is in line with other properties, they are likely to stay put compared to moving.
2. Know the Legal Limits
In some areas, you may only be able to raise the rent a specific amount. There might be a legal limit or a ceiling you have to be aware of when you raise the rent. It’s important to make sure you follow the law for your area when it comes to raising the rent.
Often, raising rent by 2% to 4% every year is a good rule of thumb. This will keep you within the legal limit and it’s so much that you will lose good tenants, in most cases.
3. Provide Plenty of Notice
It’s important to provide plenty of notice when you plan to raise the rent. In some states, you have to provide 30 to 60 days, while in others it will be 90 days before the lease expires.
It can be helpful to provide even more time. A 90-day notice before the lease expires is a good choice and can help ensure your tenants know what to expect.
4. Offer an Alternative
If you’re worried a rent increase might cost you good tenants, offer a second option. Raise the rent on a one-year lease, but offer a discount for a two-year lease, for example.
Maybe you are currently charging $1,700 for rent, but you want to increase that amount to $1,850. You can offer a discounted rent of $1,775 for a two-year lease or even the regular amount for a three-year lease.
This can help you avoid having to find new tenants for a few years, which can lead to plenty of headaches.
5. Offer an Upgrade for the Renewal
If you want to raise the rent, you can also offer a property upgrade for tenants that renew. For example, you can charge higher rent, but you can offer an upgrade to a new appliance, adding a ceiling fan, or some other type of property upgrade.
This can help the tenant see value in paying the additional cost.
Use these tips and the advice of your property management company to raise rent without losing tenants.